UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM 10-Q



            X    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
         -------
                 THE SECURITIES EXCHANGE ACT OF 1934

                     For the quarterly period ended March 31, 2003
                                                         ---------

                   TRANSITION REPORT PURSUANT TO SECTION 13 OR
         ---------
                   15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

                        For the transition period from to

                         Commission file number 1-14762

                            THE SERVICEMASTER COMPANY
             (Exact name of registrant as specified in its charter)

         Delaware                                         36-3858106
(State or other jurisdiction of                (IRS Employer Identification No.)
  incorporation or organization)

3250 Lacey Road, Downers Grove, Illinois                     60515-1700
(Address of principal executive offices)                     (Zip Code)

                                  630-663-2000
              (Registrant's telephone number, including area code)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes X No .

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Exchange Act Rule 12b-2). Yes X No .

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock: 298,933,000 shares of common stock on April 28, 2003.








<PAGE>




                                  TABLE OF CONTENTS

                                                                            Page
                                                                             NO.

THE SERVICEMASTER COMPANY (Registrant) -

PART I.  FINANCIAL INFORMATION

Item 1 : Financial Statements

Condensed Consolidated Statements of Income for the three months
 ended March 31, 2003 and March 31, 2002                                       2

Condensed Consolidated Statements of Financial Position
   as of March 31, 2003 and December 31, 2002                                  3

Condensed Consolidated Statements of Cash Flows for the three months
   ended March 31, 2003 and March 31, 2002                                     4

Notes to Condensed Consolidated Financial Statements                           5

Item 2: Management Discussion and Analysis of Financial
   Condition and Results of Operations                                        11

Item 3:  Quantitative and Qualitative Disclosures About
     Market Risk                                                              16

Item 4: Controls and Procedures                                               17


PART II.  OTHER INFORMATION

Item 1:  Legal Proceedings                                                    18

Item 6:  Exhibits and Reports on Form 8-K                                     18

Signature                                                                     19

Exhibit 99.1:  Certification of Chief Executive Officer Pursuant
to Section 1350 of  Chapter 63 of Title 18 of the
United States Code                                                            22

Exhibit 99.2:  Certification of Chief Financial Officer Pursuant
to Section 1350 of Chapter 63 of Title 18 of the
United States Code                                                            23




                                       1
<PAGE>







<TABLE>


                          PART I. FINANCIAL INFORMATION

                            THE SERVICEMASTER COMPANY
             CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

                                                                    Three Months Ended
                                                                         March 31,
                                                                    2003          2002
                                                                  ---------    ---------
<S>                                                               <C>          <C>
OPERATING REVENUE .............................................   $ 733,665    $ 734,263

OPERATING COSTS AND EXPENSES:
Cost of services rendered and products sold ...................     537,919      530,811
Selling and administrative expenses ...........................     169,245      161,602
Goodwill, trade name and other intangible amortization ........       1,640        2,154
                                                                  ---------    ---------
Total operating costs and expenses ............................     708,804      694,567
                                                                  ---------    ---------

OPERATING INCOME ..............................................      24,861       39,696

NON-OPERATING  EXPENSE (INCOME):
Interest expense ..............................................      16,283       22,541
Interest and investment income ................................      (1,219)      (2,932)
Minority interest and other expense, net ......................       2,072        1,570
                                                                  ---------    ---------

INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES .........       7,725       18,517
Provision for income taxes ....................................       3,050        6,659
                                                                  ---------    ---------

INCOME FROM CONTINUING OPERATIONS .............................       4,675       11,858

Income (loss) from discontinued operations, net of income taxes           -         (217)
                                                                  ---------    ---------
NET INCOME ....................................................   $   4,675    $  11,641
                                                                  =========    =========

PER SHARE:
BASIC EARNINGS PER SHARE:
Income from continuing operations before extraordinary items ..   $    0.02    $    0.04

Discontinued operations, net ..................................           -            -
                                                                  ---------    ---------
                                                                  $    0.02    $    0.04
                                                                  =========    =========
SHARES ........................................................     297,801      300,173


DILUTED EARNINGS PER SHARE:
Income from continuing operations before extraordinary items ..   $    0.02    $    0.04

Discontinued operations, net ..................................           -            -
                                                                  ---------    ---------
                                                                  $    0.02    $    0.04
                                                                  =========    =========
SHARES ........................................................     301,635      307,085

Dividends per share ...........................................   $   0.105    $    0.10
                                                                  =========    =========


</TABLE>



                  SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





                                       2
<PAGE>



<TABLE>



                            THE SERVICEMASTER COMPANY
       CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)

(IN THOUSANDS)
                                                                                 As of Mar. 31,         As of Dec 31,
ASSETS                                                                                2003                   2002
                                                                                  -----------            -----------
CURRENT ASSETS:
<S>                                                                               <C>                    <C>
Cash and cash equivalents .....................................................   $   104,276            $   227,409
Marketable securities .........................................................        92,518                 75,194
Receivables, less allowance of $27,209 and $27,616, respectively ..............       342,351                332,186
Inventories ...................................................................        75,336                 67,748
Prepaid expenses and other assets .............................................        71,763                 39,464
Deferred customer acquisition costs ...........................................        74,912                 48,419
Deferred taxes and income taxes receivable ....................................       125,169                123,100
Assets of discontinued operations .............................................         1,183                  5,654
                                                                                  -----------            -----------
       Total Current Assets ...................................................       887,508                919,174
                                                                                  -----------            -----------
PROPERTY AND EQUIPMENT:
   At cost ....................................................................       418,028                413,939
   Less: accumulated depreciation .............................................      (224,960)              (219,062)
                                                                                  -----------            -----------
     Net property and equipment ...............................................       193,068                194,877
                                                                                  -----------            -----------

OTHER  ASSETS:
Goodwill ......................................................................     1,940,415              1,919,780
Intangible assets, primarily trade names ......................................       253,844                257,781
Notes receivable ..............................................................        56,199                 55,770
Long-term securities and other assets .........................................        66,303                 67,556
                                                                                  -----------            -----------
       Total Assets ...........................................................   $ 3,397,337            $ 3,414,938
                                                                                  ===========            ===========

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable ..............................................................   $    85,053            $    92,121
Accrued liabilities:
   Payroll and related expenses ...............................................        88,850                 99,504
   Self-insured claims and related expenses ...................................        77,009                 84,521
   Other ......................................................................       107,277                102,380
Deferred revenues .............................................................       438,027                397,290
Liabilities of discontinued operations ........................................        19,767                 32,113
Current portion of long-term debt .............................................        33,342                 31,135
                                                                                  -----------            -----------
       Total Current Liabilities ..............................................       849,325                839,064
                                                                                  -----------            -----------
LONG-TERM DEBT ................................................................       796,888                804,340

LONG-TERM LIABILITIES:
     Deferred taxes ...........................................................       312,400                312,500
     Liabilities of discontinued operations ...................................        28,800                 28,800
     Other long-term obligations ..............................................       113,864                111,225
                                                                                  -----------            -----------
        Total Long-Term Liabilities ...........................................       455,064                452,525
                                                                                  -----------            -----------
MINORITY INTEREST .............................................................       100,309                100,309

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:
Common stock $0.01 par value, authorized 1 billion shares; issued
     316,049 and 316,024 shares, respectively .................................         3,160                  3,160
Additional paid-in capital ....................................................     1,050,410              1,054,272
Retained earnings .............................................................       329,209                355,893
Accumulated other comprehensive loss ..........................................        (2,095)                  (849)
Restricted stock ..............................................................        (4,661)                (1,988)
Treasury stock ................................................................      (180,272)              (191,788)
                                                                                  -----------            -----------
       Total Shareholders' Equity .............................................     1,195,751              1,218,700
                                                                                  -----------            -----------
       Total Liabilities and Shareholders' Equity .............................   $ 3,397,337            $ 3,414,938
                                                                                  ===========            ===========
</TABLE>

                  SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



                                       3
<PAGE>


<TABLE>



                            THE SERVICEMASTER COMPANY
           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                                 (IN THOUSANDS)
                                                                                                      Three Months Ended
                                                                                                            March 31,
                                                                                                     2003               2002
                                                                                                  ---------          ---------
<S>                                                                                               <C>                <C>
CASH AND CASH EQUIVALENTS AT JANUARY 1 .......................................................    $ 227,409          $ 402,644

CASH FLOWS FROM OPERATIONS:
NET INCOME ...................................................................................        4,675             11,641
     Adjustments to reconcile net income to net cash flows from operations:
        Loss from discontinued operations ....................................................            -                217

        Depreciation expense .................................................................       12,682             12,205
        Amortization expense .................................................................        1,640              2,154
        Deferred income tax expense ..........................................................        2,448              8,890

        Change in working capital, net of acquisitions:
            Receivables ......................................................................      (15,672)            (5,835)
            Inventories and other current assets .............................................      (66,258)           (70,938)
            Accounts payable .................................................................       (6,991)            (1,293)
            Deferred revenues ................................................................       42,867             78,265
            Accrued liabilities ..............................................................      (14,368)           (11,299)
            Other, net .......................................................................        1,911              1,830
                                                                                                  ---------          ---------
NET CASH PROVIDED FROM (USED FOR) OPERATIONS .................................................      (37,066)            25,837
                                                                                                  ---------          ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
      Property additions .....................................................................      (10,549)            (9,652)
      Sale of equipment and other assets .....................................................          980                790
      Business acquisitions, net of cash acquired ............................................      (13,070)            (4,412)
      Notes receivable, financial investments and securities .................................      (14,016)             7,060
                                                                                                  ---------          ---------
NET CASH USED FOR INVESTING ACTIVITIES .......................................................      (36,655)            (6,214)
                                                                                                  ---------          ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
      Net payments of debt ...................................................................      (10,549)           (54,127)
      Purchase of ServiceMaster stock ........................................................       (1,901)                 -
      Shareholders' dividends ................................................................      (31,359)           (29,402)
      Other, net .............................................................................        2,273              6,354
                                                                                                  ---------          ---------
NET CASH USED FOR FINANCING ACTIVITIES .......................................................      (41,536)           (77,175)
                                                                                                  ---------          ---------

                                                                                                  ---------          ---------
CASH USED FOR DISCONTINUED OPERATIONS ........................................................       (7,876)           (26,234)
                                                                                                  ---------          ---------

CASH DECREASE DURING THE PERIOD ..............................................................     (123,133)           (83,786)
                                                                                                  ---------          ---------

CASH AND CASH EQUIVALENTS AT MARCH 31 ........................................................    $ 104,276          $ 318,858
                                                                                                  =========          =========
</TABLE>


            SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



                                       4
<PAGE>




                            THE SERVICEMASTER COMPANY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 1: The condensed  consolidated financial statements include the accounts of
ServiceMaster and its subsidiaries,  collectively  referred to as "the Company".
Intercompany transactions and balances have been eliminated in consolidation.

NOTE 2: The condensed  consolidated  financial  statements have been prepared by
the Company in accordance with generally accepted  accounting  principles (GAAP)
and  pursuant  to the rules  and  regulations  of the  Securities  and  Exchange
Commission.  The Company  suggests  that the  quarterly  condensed  consolidated
financial  statements be read in  conjunction  with the  consolidated  financial
statements and the notes thereto  included in the Company's latest Annual Report
to Shareholders and the Annual Report to the Securities and Exchange  Commission
on Form 10-K for the year ended  December 31, 2002.  The condensed  consolidated
financial  statements  reflect  all  adjustments,  which are,  in the opinion of
management,  necessary  for the fair  presentation  of the  financial  position,
results of  operations  and cash flows for the interim  periods.  The results of
operations for any interim period are not necessarily  indicative of the results
which might be achieved for a full year.

NOTE 3: The Company has  identified the most  important  accounting  policies in
order to portray its financial position and results of operations.  These relate
primarily to revenue recognition and the deferral of customer acquisition costs.
The following  revenue  recognition  policies  have not changed since  year-end.
Revenues  from  lawn  care,   pest  control,   liquid  and  fumigation   termite
applications,  as well as  heating/air  conditioning  and plumbing  services are
recognized as the services are provided.  Revenues from landscaping services are
recognized as they are earned based upon agreed monthly contract arrangements or
when services are performed for non-contractual arrangements.  Revenues from the
Company's  commercial  installation  contracts,  primarily  relating to heating,
ventilation  and air  conditioning  (HVAC),  are recognized on the percentage of
completion method in the ratio that total incurred costs bear to total estimated
costs. The Company eradicates  termites through the use of baiting stations,  as
well as through  non-baiting  methods  (e.g.,  fumigation or liquid  treatment).
Termite  services  using  baiting  stations  as well as home  warranty  services
typically are sold through  annual  contracts for a one-time,  upfront  payment.
Direct costs of these contracts  (ongoing service costs for termite  completions
and claim costs for warranty  contracts)  are expensed as incurred.  The Company
recognizes  revenue  over the  life of  these  contracts  in  proportion  to the
expected  direct  costs.  Revenue  from trade  name  licensing  arrangements  is
recognized when earned.  Franchised  revenues (which in the aggregate  represent
approximately  three percent of  consolidated  revenue)  consist  principally of
continuing monthly fees based upon the franchisee  revenue.  Monthly fee revenue
is recognized when the related franchise revenue is reported from the franchisee
and  collectibility is assured and all material services or conditions  relating
to the sale  have been  substantially  performed.  Total  franchise  fee  income
(excluding  trade name licensing)  represented  35.4 percent and 21.5 percent of
consolidated  operating  income for the three  months  ended  March 31, 2003 and
2002, respectively. The portion of total franchise fee income related to initial
fees  received  from the sale of a franchise  were  immaterial  to the Company's
consolidated financial statements for all periods.

Customer  acquisition costs, which are incremental and direct costs of obtaining
the  customer,  are  deferred  and  amortized  over the life of the  contract in
proportion to revenue  recognized.  These costs include  sales  commissions  and
direct selling costs which can be shown to have resulted in a successful sale.

TruGreen ChemLawn has significant seasonality to its business. In the winter and
early spring,  this business  sells a series of lawn  applications  to customers
which are  rendered  primarily  in March  through  October.  The Company  incurs
incremental  selling  expenses at the beginning of the year that directly relate
to successful sales for which the revenues will be recognized in later quarters.
This business also defers, on an interim basis, pre-season advertising costs and
annual  repairs  and  maintenance  procedures  that are  performed  in the first
quarter. These costs are deferred and recognized  approximately in proportion to
the contract revenue over the production season, and are not deferred beyond the
calendar year-end.

As noted  above,  TruGreen's  pre-season  advertising  costs  are  deferred  and
recognized  approximately  in proportion to the contract  revenue over the year.
Terminix also defers its  advertising  costs in the first

                                       5
<PAGE>


quarter and recognizes  the expense over the year.  These costs are not deferred
beyond  the  calendar  year-end.  The  cost of  direct-response  advertising  at
Terminix  is  capitalized  and  amortized  over its  expected  period  of future
benefits.  This  direct-response  advertising  consists primarily of direct-mail
promotions,  for which the cost is  capitalized  and amortized over the one-year
customer contract life.

The preparation of the financial  statements requires management to make certain
estimates  and  assumptions   required  under  generally   accepted   accounting
principles which may differ  materially from the actual results.  Disclosures in
the 2002 Annual Report  presented the significant  areas that require the use of
management's  estimates and discussed how  management  formed its judgment.  The
areas   discussed   included  the  allowance  for   receivables,   accruals  for
self-insured retention limits related to medical, workers compensation, auto and
general liability  insurance,  the possible outcome of litigation and the useful
lives for depreciation  and  amortization  expense and the valuation of tangible
and intangible  assets.  In 2003,  there have been no changes in the significant
areas that require estimates or in the methodologies.

NOTE 4: The  Company  carries  insurance  policies on  insurable  risks which it
believes to be appropriate.  The Company  generally has  self-insured  retention
limits and has obtained fully insured layers of coverage above such self-insured
retention  limits.  Accruals  for  self-insurance  losses  are made based on the
Company's claims experience and actuarial  assumptions.  The Company has certain
liabilities with respect to existing or potential  claims,  lawsuits,  and other
proceedings.  The Company accrues for these liabilities when it is probable that
future costs will be incurred and such costs can be reasonably estimated.

NOTE 5: In accordance with Statement of Financial  Accounting  Standards  (SFAS)
142,  "Goodwill  and  Other  Intangible  Assets,"  the  Company's  goodwill  and
indefinite  lived  intangible  assets  are not  being  amortized.  Goodwill  and
intangible  assets  that are not  amortized  are  subject  to at least an annual
assessment  for  impairment  by applying a fair-value  based test.  In the first
quarter,  the Company  reviewed  its  intangible  balances and removed the fully
amortized  asset as well as the  related  accumulated  amortized  balance on the
financial  statements.  During this process  certain  reclassifications  between
categories were made. The following table summarizes the goodwill and intangible
asset balances:



(IN THOUSANDS)                                 As of              As of
                                             March 31,         December 31,
                                               2003                2002
                                           --------------    -----------------
Goodwill (1)                                  $1,940,415           $1,919,780
Trade names (1)                                  238,550              238,550

Other intangible assets                           43,490               78,284
Accumulated amortization (2)                     (28,196)             (59,053)
                                           --------------    -----------------
Net other intangibles                             15,294               19,231
                                           --------------    -----------------
Total                                         $2,194,259           $2,177,561
                                           ==============    =================

(1)  Not subject to amortization.

(2)  Annual amortization expense of approximately $7 million in 2003 is expected
     to decline over the next five years.

The table below presents,  by segment, the goodwill and trade names that are not
subject to amortization:

(IN THOUSANDS)                 March 31,           December 31,
                                 2003                  2002
                           ------------------    ------------------
TruGreen                            $935,009              $916,216
Terminix                             711,200               709,955
American Home Shield                  72,085                72,085
ARS/AMS                              347,968               347,968
Other Operations                     112,703               112,106
                           ------------------    ------------------
Total                             $2,178,965            $2,158,330
                           ==================    ==================



                                       6
<PAGE>


NOTE 6: Basic  earnings  per share is computed by dividing  income  available to
common stockholders by the weighted-average number of shares outstanding for the
period.  The weighted  average common shares for the diluted  earnings per share
calculation includes the incremental effect related to outstanding options whose
market price is in excess of the exercise  price.  Shares  potentially  issuable
under convertible securities have not been considered outstanding in the diluted
earnings   per  share   calculations   for  both  periods  as  their  impact  is
anti-dilutive.

The following  table  reconciles  both the numerator and the  denominator of the
basic earnings per share from continuing operations computation to the numerator
and the denominator of the diluted earnings per share from continuing operations
computation.
<TABLE>


(IN THOUSANDS, EXCEPT PER SHARE DATA)                   Three Months                          Three Months
                                                    Ended March 31, 2003                  Ended March 31, 2002
                                              --------------------------------       ------------------------------
CONTINUING OPERATIONS:                         INCOME       SHARES      EPS           INCOME      SHARES      EPS
----------------------                        --------     --------   ------         --------    --------   ------
<S>                                              <C>       <C>         <C>            <C>         <C>        <C>
 Basic earnings per share                        $4,675    297,801     $0.02          $11,858     300,173    $0.04
                                                                      ========                              =======
 Effect of dilutive securities -options                      3,834                                  6,912
                                              ----------   ---------                 ----------  ---------

 Diluted earnings per share                      $4,675    301,635     $0.02          $11,858     307,085    $0.04
                                              ==========   =========  ========       ==========  =========  =======
</TABLE>




NOTE 7:  Beginning in 2003, the Company is accounting for employee stock options
as compensation expense in accordance with SFAS 123, "Accounting for Stock-Based
Compensation."  SFAS 148 "Accounting  for Stock-Based  Compensation - Transition
and Disclosure,  an amendment of FASB Statement No. 123",  provides  alternative
methods  of  transitioning  to the fair value  based  method of  accounting  for
employee  stock  options  as  compensation  expense.  The  Company  is using the
"prospective method" of SFAS 148 and will expense the fair value of new employee
option  grants  awarded  subsequent  to  2002.  If  the  Company  continues  its
historical   pattern  of  option   granting,   the  impact  is  expected  to  be
approximately  $.005 per share in 2003,  growing to approximately $.03 per share
over five years.

Prior to 2003,  the Company  accounted  for  employee  share  options  under the
intrinsic  method of Accounting  Principles Board Opinion 25, as permitted under
GAAP. Had  compensation  expense for employee  options been determined under the
fair  value  based  method of SFAS 123,  proforma  reported  net  income and net
earnings per share would reflect the following:

                                                       Three Months Ended
                                                            March 31,
(IN THOUSANDS, EXCEPT PER SHARE DATA)              2003                  2002
                                              ----------------------------------

Net income as reported                                $4,675            $11,641

Add back:  Stock-based compensation
  expense included in reported net income,
  net of related tax effects                             164                  -

Deduct:  Total stock-based compensation
  expense   determined   under   fair  value
method,
  net of related tax effects                         (1,877)            (1,894)
                                              ---------------    ---------------
Proforma net income                                   $2,962             $9,747
                                              ===============    ===============

Basic Earnings Per Share:
  As reported                                          $0.02              $0.04

  Proforma                                             $0.01              $0.03

Diluted Earnings Per Share:
  As reported                                          $0.02              $0.04

  Proforma                                             $0.01              $0.03



NOTE  8:  In  January  2003,  the  FASB  issued  FASB   Interpretation  No.  46,
"Consolidation   of   Variable   Interest   Entities"   (FIN  46).   Under  this
Interpretation,  certain  entities known as "Variable  Interest  Entities" (VIE)
must be  consolidated by the "primary  beneficiary"  of the entity.  The primary
beneficiary is generally defined as having the majority of the risks and rewards
arising  from the VIE.  For  VIE's in  which a  significant  (but not  majority)
variable  interest is held,  certain  disclosures  are required.  The Company is
required to apply the  requirements  of FIN 46 starting  with its third  quarter
2003 Form 10-Q  filing.  The




                                       7
<PAGE>

Company is presently assessing the impact of this Interpretation; however, it is
not expected to have a material impact on the Consolidated Financial Statements.
Based on information as of March 31, 2003,  adoption of this  Interpretation  in
2003 could  result in  approximately  $5 million to $60  million of real  estate
operating  leases being included on the balance sheet as assets with  associated
debt.


NOTE 9: In the Condensed Consolidated Statements of Cash Flows, the caption Cash
and  Cash  Equivalents   includes   investments  in  short-term,   highly-liquid
securities having a maturity of three months or less.  Supplemental  information
relating to the  Condensed  Consolidated  Statements of Cash Flows for the three
months ended March 31, 2003 and 2002 is presented in the following table:

                                              (IN THOUSANDS)
                                             2003         2002
                                        -----------   -----------
CASH PAID OR (RECEIVED) FOR:
Interest expense......................  $   23,491    $   28,969
Interest and dividend income..........  $   (2,156)   $   (3,198)
Income taxes..........................  $      618    $   28,090


The decrease in interest  paid in 2003 is primarily  due to reduced debt levels.
The tax  payment in 2002  resulted  from the gain on the sale of the  Management
Services business.

NOTE 10: Total  comprehensive  income was $3.4 million and $13.1 million for the
three months ended March 31, 2003 and 2002,  respectively.  Total  comprehensive
income includes primarily net income,  changes in unrealized gains and losses on
marketable securities and foreign currency translation balances.

NOTE 11: In 2001, the Company  entered into an agreement  which provides for the
ongoing  revolving sale of a designated pool of accounts  receivable of TruGreen
and  Terminix to a  wholly-owned,  bankruptcy-remote  subsidiary,  ServiceMaster
Funding  LLC.  ServiceMaster  Funding  LLC  has  entered  into an  agreement  to
transfer,  on a revolving basis, an undivided percentage ownership interest in a
pool of accounts  receivable to unrelated third party purchasers.  ServiceMaster
Funding LLC  retains an  undivided  percentage  interest in the pool of accounts
receivable  and bad debt losses for the entire pool are allocated  first to this
retained interest. At March 31, 2003 and 2002, there were no receivables sold to
third  parties  under  this  agreement.   However,  the  Company  may  sell  its
receivables in the future which would provide an alternative funding source. The
agreement  is a  364-day  facility  that  is  renewable  at  the  option  of the
purchasers.  The Company may sell up to $65 million of its  receivables to these
purchasers in the future and  therefore  has  immediate  access to cash proceeds
from these sales. The amount of the eligible  receivables varies during the year
based  on  seasonality  of the  business  and  will at times  limit  the  amount
available to the Company.

NOTE 12: In October 2001, the Company's Board of Directors  approved a series of
strategic  actions which were the culmination of an extensive  portfolio  review
process  that was  initiated  in the  first  quarter  of  2001.  As part of this
portfolio  review,   the  Company  sold  or  exited  certain   non-strategic  or
under-performing  businesses in the fourth  quarter of 2001 and third quarter of
2002.  The results of these  discontinued  business  units have been  separately
classified  as   "Discontinued   Operations"  in  the   accompanying   financial
statements.

The  Company  continues  to carry  certain  assets on its  financial  statements
relating  to these  operations.  Management  is actively  selling the  remaining
equipment and collecting the outstanding receivables.  The Company believes that
the remaining  assets are presented at their net realizable  value. In addition,
reserves and accrual  balances  remain on the financial  statements  relating to
these  operations.  Cash  payments  incurred in the first  three  months of 2003
include  a cash  adjustment  to the  purchase  price of a 2001  disposition  and
wind-down  of  LandCare  Construction  contracts.  The  remaining  balances  are
outlined in the table below.

In the  fourth  quarter  of  2001,  the  Company  recorded  a charge  for  asset
impairments  and  other  items  which  included   accruals  for  residual  value
guarantees on leased properties,  severance for former executives and terminated
employees, and other costs.

The table below  summarizes the activity during the three months ended March 31,
2003 for the remaining  liabilities  from the  discontinued  operations  and the
reserves for items recorded in the fourth quarter of 2001. The Company  believes
that the remaining reserves continue to be adequate and reasonable.


                                       8
<PAGE>




(IN THOUSANDS)                    Balance at           Cash         Balance at
                                  December 31,       Payments        March 31,
                                     2002            or Other          2003
                                  ------------      ----------    --------------
Remaining liabilities from
  discontinued operations
     LandCare Construction          $14,000         $2,800           $11,200
     Certified Systems, Inc.         13,600            400            13,200
     Management Services              1,600            200             1,400
     International businesses        21,400          8,900            12,500
     Other                           10,400            200            10,200
Reserves related to strategic
  actions in the fourth
  quarter of 2001                   $15,500         $1,300           $14,200



NOTE 13:  The  business  of the  Company is  conducted  through  five  operating
segments:   TruGreen,   Terminix,   American  Home  Shield,  ARS/AMS  and  Other
Operations.  In accordance with Statement of Financial  Accounting Standards No.
131, the Company's  reportable  segments are strategic business units that offer
different  services.  The TruGreen segment  provides  residential and commercial
lawn care and landscaping  services  through the TruGreen  ChemLawn and TruGreen
LandCare  companies.  The  Terminix  segment  provides  termite and pest control
services to residential and commercial U.S. customers.  The American Home Shield
segment  provides  home  warranties to consumers  that cover HVAC,  plumbing and
certain appliances. This segment also includes home inspection services provided
by AmeriSpec.  The American Residential Services,  (ARS) and American Mechanical
Services (AMS) segment  provides HVAC and plumbing  services  provided under the
ARS, AMS and Rescue Rooter brand names.  The Other  Operations  segment includes
the franchise  operations of ServiceMaster  Clean and Merry Maids, which provide
disaster restoration and cleaning services as well as the Company's headquarters
operations  which  provides  various  technology,  marketing,  finance and other
support services to the business units. Segment information is presented below.





                                       9
<PAGE>


<TABLE>




(IN THOUSANDS)                                                Three Months            Three Months
                                                             Ended March 31,         Ended March 31,
                                                                  2003                    2002
--------------------------------------------------------------------------------------------------
Operating Revenue:
<S>                                                             <C>                      <C>
  TruGreen                                                      $225,869                 $229,143
  Terminix                                                       225,906                  220,273
  American Home Shield                                            94,224                   85,916
  ARS/AMS                                                        151,433                  165,091
  Other Operations                                                36,233                   33,840
--------------------------------------------------------------------------------------------------
Total Operating Revenue                                         $733,665                 $734,263
==================================================================================================

Operating Income (Loss):
  TruGreen                                                      $(8,830)                   $6,524
  Terminix                                                        33,528                   37,936
  American Home Shield                                             8,159                    3,355
  ARS/AMS                                                        (1,170)                  (2,886)
  Other Operations                                               (6,826)                  (5,233)
--------------------------------------------------------------------------------------------------
Total Operating Income                                           $24,861                  $39,696
==================================================================================================

                                                                 As of                    As of
                                                             March 31, 2003           Dec. 31, 2002
--------------------------------------------------------------------------------------------------
Identifiable Assets:
  TruGreen                                                    $1,188,442               $1,070,031
  Terminix                                                       839,102                  841,437
  American Home Shield                                           363,745                  376,059
  ARS/AMS                                                        478,571                  489,366
  Other Operations (and discontinued businesses)                 527,477                  638,045
--------------------------------------------------------------------------------------------------
Total Identifiable Assets                                     $3,397,337               $3,414,938
==================================================================================================
</TABLE>




                                       10
<PAGE>


    MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
                                   OPERATIONS


RESULTS OF OPERATIONS

FIRST QUARTER 2003 COMPARED TO FIRST QUARTER 2002

CONSOLIDATED REVIEW

Revenue for the first  quarter of 2003 was $734 million,  consistent  with 2002,
reflecting  a solid  increase  at American  Home Shield and growth in  Terminix,
TruGreen  LandCare and the franchise  operations,  offset by revenue declines in
the ARS/AMS segment and the lawn care operations of TruGreen. First quarter 2003
diluted  earnings per share was $.02 compared to $.04 in 2002.  Operating income
was $25 million,  compared to $40 million in 2002. The decline in  profitability
reflects  the impact of late season  cold  weather and  snowfall  which  delayed
TruGreen's  lawn care  production  season into later quarters as well as reduced
lead  flow  in  Terminix  across  southern  regions  of the  country  as  cooler
temperatures significantly reduced termite swarms and pest activity.

Cost of  services  rendered  and  products  sold  increased  one percent for the
quarter and  increased as a  percentage  of revenue to 73.3 percent in 2003 from
72.3 percent in 2002. Selling and administrative expenses increased five percent
and  increased  as a  percentage  of revenue  to 23.1  percent in 2003 from 22.0
percent in 2002. The increase in selling and  administrative  expenses primarily
reflects  increased  expenditures  on  marketing,  as  well  as  enterprise-wide
technology and regulatory compliance initiatives.

Net  interest  expense  decreased  $4 million  from 2002,  primarily  reflecting
reduced debt levels. The tax provision in 2003 has returned to a normalized rate
of 40 percent,  which is a higher  effective  tax rate than 2002.  The 2002 rate
included the one-time benefit from utilizing the prior year net operating losses
of the ServiceMaster Home Service Center operations.

OUTLOOK

Despite adverse  economic and weather  conditions,  the Company expects that its
business  units will  generate  revenue  and  operating  income  growth in 2003.
However,  the Company expects this business growth to be offset by the increased
cost of a higher tax rate and increased  expenditures in marketing,  technology,
and regulatory compliance initiatives.  These factors, combined with the current
business trends,  leads the Company to estimate that its 2003 earnings per share
from continuing operations will match last year's figure.

The Company expects to realize  continuing  benefits from its strategic sourcing
and Six Sigma  initiatives  and estimates they will  contribute $.04 to $.05 per
diluted share in 2003.  In addition,  the Company's  debt  reduction  program is
expected to reduce interest expense by  approximately  $.01 per diluted share in
2003. There are a number of factors that are expected to offset these items. The
Company  anticipates  continued  increases in health care,  insurance,  and to a
lesser  extent,  fuel  costs.  The  Company  is  aggressively  focused  on  risk
management and safety programs and has an active fuel cost management program in
place.  Nonetheless,  based on current trends, cost increases in these areas are
expected  to have a negative  impact in 2003 of  approximately  $.05 per diluted
share.  In  addition,  the  Company has  increased  expenditures  on  marketing,
technology,  and process  improvement  to enhance  operating  efficiency,  build
greater  customer  satisfaction,   and  meet  the  demands  of  an  increasingly
regulatory  environment.  These  increased  expenditures in 2003 are expected to
total $.03 to $.04 per diluted share.  Finally,  the 2002  effective  income tax
rate  included  a one-time  benefit  of  approximately  $.04 per  diluted  share
resulting from the use of net operating  losses of a subsidiary  operation.  The
effective  income tax rate for 2003 is expected to be a more  normalized rate of
approximately 40 percent.




                                       11
<PAGE>



KEY PERFORMANCE INDICATORS

The table  below  presents  selected  metrics  related  to  customer  counts and
customer  retention  for the three most  profitable  businesses  of the Company.
These measures are presented on a rolling,  twelve-month basis in order to avoid
seasonal anomalies.

                           KEY PERFORMANCE INDICATORS
                                 As of March 31,

                                                   2003              2002
                                               -------------     ------------
TRUGREEN -
   Growth in Full Program Contracts                   2%               -2%
   Customer Retention Rate                         63.5%             62.2%

TERMINIX -
   Growth in Pest Control Customers                   1%               11%
   Pest Control Customer Retention Rate            75.2%             77.1%

   Growth in Termite Customers                        0%                8%
   Termite Customer Retention Rate                 88.6%             89.9%

AMERICAN HOME SHIELD -
   Growth in Warranty Contracts                      12%               15%
   Customer Retention Rate                         53.3%             52.6%


SEGMENT REVIEW

The TruGreen segment includes lawn care operations  performed under the TruGreen
ChemLawn  brand  name and  landscape  maintenance  services  provided  under the
TruGreen  LandCare brand name.  The TruGreen  segment  reported  revenue of $226
million in 2003,  one percent below 2002.  The segment's  operating loss for the
quarter was $9 million  compared with operating income of $7 million in 2002. In
the lawn care  operations,  customer  counts  increased  more than two  percent,
however,  revenue  decreased eight percent as late season  snowfall  experienced
throughout the central,  mid-Atlantic and eastern regions of the country delayed
TruGreen's  ability to begin  servicing  residential  contracts that had already
been sold. The Company  estimates that  approximately $10 million to $15 million
of  production  revenue  was  delayed  to later  quarters  due to these  weather
factors.  Management is focused on taking measures to capture all of the revenue
associated with the contracts that have been sold,  including  ensuring that the
labor force and vehicle capacity will be in place to meet the production demand.
Operating  income margins in the lawn care operations  declined in 2003 compared
with 2002 due to the reduced level of production.  In the landscape  maintenance
business,  revenue  increased  five  percent  during  the first  quarter of 2003
compared with 2002,  reflecting a significant  increase in snow removal revenue,
partially  offset by a decline in the level of enhancement  sales (higher priced
discretionary  services  such as  seasonal  flower  plantings),  which have been
impacted  by the weak  economy.  Operating  income  margins  in the  landscaping
business  declined in 2003 due to pricing pressures in the utility line clearing
operations.  Capital  employed  (computed  as the  segment's  total  assets less
liabilities,  exclusive of debt balances) in the TruGreen segment  decreased one
percent to $1.01  billion at March 31, 2003 compared with $1.03 billion at March
31, 2002.

The Terminix  segment,  which  includes  the  domestic  termite and pest control
services, reported a three percent increase in revenue to $226 million from $220
million in 2002 and operating  income of $34 million  compared to $38 million in
2002.  Revenue  growth was supported by an increase in customer  renewals and an
increase in the commercial pest control customer base.  However,  adverse cooler
temperatures  that impacted many southern  regions of the country  significantly
impeded the  development  of the  termite  swarm and other pest  activity.  As a
result, termite and pest control sales leads have declined significantly. Due to
the seasonal nature of the termite swarm, it is expected that  approximately $20
million of lost  volume  cannot be  recovered.  The adverse  weather  conditions
coupled with the weak economy  contributed to the decline in customer  retention
rates.  Management is optimistic,  however, that as heavy precipitation has left
several  regions of the country with overall  higher  moisture  levels,  pending
warmer  weather  should  result in an  increase  in termite  and pest  activity.
Operating  income margins declined from 2002 and were impacted

                                       12
<PAGE>


by a reduction in volume of new sales activity and incremental  costs associated
with  Terminix's  new  information  system.  The  rollout of this  system to the
branches is  expected to be  completed  by the second  quarter of 2004.  Capital
employed at March 31, 2003 was $602  million,  consistent  with $603  million at
March 31, 2002.

The American Home Shield  segment,  which provides home  warranties to consumers
that cover HVAC,  plumbing and other appliances,  reported a 10 percent increase
in revenue to $94 million  from $86 million in 2002 and  operating  income of $8
million compared to $3 million in 2002. Revenue growth was driven primarily by a
strong increase in renewals  partially  offset by a softening in new real estate
closings.  Although retention rates continue to improve,  mortgage  refinancings
have resulted in an increase in  cancellations  in channels where the customer's
warranty payment is included in the mortgage statement. The Company continues to
expand  its  third-party   sales  channel  and  has   successfully   launched  a
relationship  with  a  major  insurance  carrier.   Operating  margins  improved
substantially  reflecting the  leveraging of fixed costs from volume  growth,  a
lower claims rate and favorable trending of prior year claims.  Capital employed
increased  15 percent  to $101.7  million at March 31,  2003  compared  to $88.5
million at March 31, 2002, reflecting volume growth in the business as well as a
higher level of investments.

The  ARS/AMS  segment  provides  direct  HVAC and  plumbing  services  under the
American  Residential  Services (ARS),  Rescue Rooter,  and American  Mechanical
Services  (AMS) (for large  commercial  accounts)  brand names.  Revenue for the
quarter  totaled  $151  million in 2003,  a decrease of eight  percent from $165
million in 2002. The decline in revenue primarily reflects significant reduction
in HVAC  construction  revenue in both the residential  and commercial  sectors,
partially offset by an increase in add-on replacement HVAC activity. Despite the
decline in revenue,  the  operating  loss in the  segment  was  reduced  from $3
million in 2002 to $1 million,  primarily due to improved  gross margins and the
timing of  expenditures.  Higher gross margins in both HVAC and plumbing service
lines more than offset the lower earnings in the construction business.  Capital
employed  decreased six percent to $394.5  million at March 31, 2003 compared to
$421.5 million at March 31, 2002, reflecting reduced receivable levels.

The Other Operations segment includes the Company's  ServiceMaster  Clean, Merry
Maids,  and  international  operations  as well as its  headquarters  functions.
Reported  segment  revenue of $36 million in 2003  compared  with $34 million in
2002,  primarily  reflected  growth in the  ServiceMaster  Clean and Merry Maids
businesses.  This  segment  reported  an  operating  loss of $7  million in 2003
compared with a loss of $5 million in 2002,  reflecting  double-digit  growth in
ServiceMaster  Clean  offset by  increased  expenditures  related to  marketing,
technology,  and regulatory  compliance  initiatives.  Capital  employed in this
segment  decreased  significantly to $13.5 million at March 31, 2003 compared to
$274.9  million at March 31,  2002,  primarily  reflecting  reduced  cash levels
following the Company's debt reduction program.

FINANCIAL POSITION

Net cash flow used for operations was $37 million in the quarter,  compared with
operations  providing  net cash of $26  million  in the first  quarter  of 2002.
Historically,  the  first  quarter  is a period  of  investment  for many of the
Company's  businesses as they prepare for the summer and fall production season.
Consequently,  the Company's  first quarter cash flows from operations are lower
than in any other  quarter,  and, are often  negative.  Several items impact the
comparison of the 2003 cash flows from  operations  with 2002,  with the largest
component being  approximately $35 million in lower deferred revenue  associated
with  prepayments in 2003,  primarily in TruGreen  ChemLawn.  TruGreen  ChemLawn
typically  receives  prepayments  for  its  services  in the  fourth  and  first
quarters. In preparation for the 2003 season,  prepayment programs were launched
earlier than the prior year resulting in an  acceleration  of  prepayments  (and
cash flow) from the first quarter to the fourth  quarter,  relative to the prior
year.  In addition,  lower sales at Terminix and a reduced  prepayment  discount
resulted in fewer customers  prepaying.  Although many  businesses  continued to
show  improvements  in  receivables  management in 2003,  there was not the same
level of incremental improvement that was experienced in 2002 when both TruGreen
LandCare and ARS made substantial  improvements in their receivable  levels. The
first quarter of 2002 also included a large  payment for  ServiceMaster  Clean's
work at the Pentagon.  The cash flow  comparison was also impacted by the timing
of payments related to insurance,  bonuses and vendors,  with an increased level
of payments in 2003 compared to 2002.  Management  believes that funds generated
from  operations  and other  existing  resources will continue to be adequate to
satisfy ongoing working capital needs of the Company.


                                       13
<PAGE>


Cash and marketable securities totaled approximately $197 million at March 31,
2003. During 2002, the Company completed its debt reduction program announced in
October 2001. As a result of strong cash flows and the net proceeds received
from the Company's 2001 dispositions, total debt has been reduced by
approximately $1.0 billion over the last two years and represents the Company's
lowest debt levels in over five years. The debt reduction program enabled the
Company to lengthen its maturity profile by focusing debt reductions on shorter
maturities. Approximately 67 percent of the Company's debt now matures beyond
five years and 42 percent beyond fifteen years. The Company's next significant
debt maturity is not until 2005.

The Company  maintains a three-year  revolving credit facility for $490 million,
which will expire in December  2004. As of March 31, 2003 the Company had issued
approximately  $147  million  of letters of credit  under the  facility  and had
unused  commitments  of  approximately  $343 million.  The Company also has $550
million of senior  unsecured debt and equity  securities  available for issuance
under an effective shelf registration statement. In addition, the Company has an
arrangement  enabling it to sell, on a revolving basis,  certain  receivables to
unrelated third party  purchasers.  At March 31, 2003, there were no receivables
outstanding  that had been sold to third  parties.  The  agreement  is a 364-day
facility that is renewable at the option of the purchasers. The Company may sell
up to $65 million of its eligible  receivables to these purchasers in the future
and therefore has immediate access to cash proceeds from these sales. The amount
of  eligible  receivables  varies  during the year based on  seasonality  of the
business  and will at times  limit the  amount  available  to the  Company.  The
Company also  maintains  lease  facilities  with banks totaling $95 million that
provide for the  acquisition  and  development of properties to be leased by the
Company.  There are  residual  value  guarantees  of these  properties  up to 82
percent of the fair market value of the properties. At March 31, 2003, there was
approximately $73 million funded under these  facilities.  Of the $95 million in
facilities,  $80  million  expires in October  2004 and $15  million  expires in
January 2008. Approximately $15 million of these leases that involve constructed
properties  have been  included on the balance sheet as assets with related debt
as of March 31, 2003 and December  31,  2002,  and the balance of the leases are
operating leases.  The majority of the Company's vehicle fleet is leased through
operating leases.  The lease terms are non-cancelable for the first twelve-month
term, then are month-to-month leases,  cancelable at the Company's option. There
are residual value guarantees  (ranging from 70 percent to 87 percent  depending
on the agreement) on these  vehicles,  which  historically  have not resulted in
significant  net  payments  to  the  lessors.  At  March  31,  2003,  there  was
approximately $256 million of residual value relating to the Company's fleet.

The following table presents the Company's obligations and commitments:
<TABLE>

                                                                2004 and     2006 and      2008 and
(IN MILLIONS)                           TOTAL        2003         2005          2007      LATER YEARS
------------------------------------------------------------------------------------------------------
<S>                                     <C>          <C>          <C>           <C>          <C>
Debt balances                           $830         $24          $176          $71          $559
NON-CANCELABLE OPERATING LEASES (1)      267          51            99           63            54
------------------------------------------------------------------------------------------------------
Total amount                          $1,097         $75          $275         $134          $613
</TABLE>

(1)  Includes lease payments and residual value guarantees on leased properties.

There  have been no  material  changes in the terms of the  Company's  financing
agreements  since December 31, 2002. As described in the Company's latest Annual
Report to  Shareholders,  the  Company  is party to a number of debt  agreements
which require it to maintain certain  financial and other  covenants,  including
limitations on indebtedness  and interest  coverage  ratio.  In addition,  under
certain  circumstances,  the agreements  may limit the Company's  ability to pay
dividends and  repurchase  shares of common  stock.  These  limitations  are not
expected to be a factor in the Company's  future  dividend and share  repurchase
plans.  Failure by the Company to maintain these  covenants  could result in the
acceleration  of the maturity of the debt. At March 31, 2003, the Company was in
compliance with the covenants  related to these debt agreements and based on its
operating  outlook  for the  remainder  of 2003,  expects to be able to maintain
compliance in the future.

The assets and  liabilities  relating to the  discontinued  companies  have been
classified  in separate  captions on the  Condensed  Consolidated  Statements of
Financial  Position.   Assets  of  the  discontinued  operations  have  declined
reflecting  cash  collections on receivables  and the sale of fixed assets.  The
liabilities  from  discontinued  operations  have declined as a result of a cash
adjustment  to the  purchase  price of the  2001

                                       14
<PAGE>


disposition  of the  Company's  European  pest  control  and  property  services
operations as well as certain other payments.

Receivables and inventories  increased from year-end levels,  reflecting general
business  growth and increased  seasonal  activity.  Prepaid  expenses and other
assets increased from year-end primarily reflecting pre-season advertising costs
and annual repairs and  maintenance  procedures  that are performed in the first
quarter at  TruGreen  ChemLawn  and  advertising  at  Terminix.  These costs are
deferred  and  recognized  in  proportion  to  the  contract  revenue  over  the
production season,  and are not deferred beyond the calendar year-end.  Deferred
customer acquisition costs increased reflecting the seasonality in the lawn care
operations. In the winter and early spring, this business sells a series of lawn
applications to customers which are rendered primarily in March through October.
The lawn care operations incur incremental  selling expenses at the beginning of
the year that directly relate to successful  sales in which the revenues will be
recognized  in later  quarters.  These  costs are  deferred  and  recognized  in
proportion  to the contract  revenue  over the  production  season,  and are not
deferred beyond the calendar year-end.  Deferred revenues  increased  reflecting
strong growth in warranty contracts written at American Home Shield.

Capital  expenditures  which include  recurring  capital  needs and  information
technology  projects  are  approximately  at the same levels as prior year.  The
Company has no material capital  commitments at this time. Tuck-in  acquisitions
in the first  quarter of 2003 totaled $13 million,  compared  with $4 million in
2002. The 2003 acquisitions occurred primarily at TruGreen ChemLawn.

Total  shareholders'  equity was $1.2 billion at March 31, 2003 and December 31,
2002,  reflecting  earnings  growth  which was  offset by cash  dividends.  Cash
dividends paid directly to  shareholders  totaled $31 million or $.105 per share
for the three  months ended March 31,  2003.  In April 2003,  the Company paid a
second quarter cash dividend of $.105 per share. If this quarterly dividend rate
continues  through 2003,  it would result in an annual  payment for 2003 of $.42
per share, a 2.4% increase over 2002. The Company  approves its actual  dividend
payment on a quarterly basis and continually reviews its dividend policy,  share
repurchase program and other capital structure objectives.  Although the Company
has not undertaken  material share repurchases  during the first three months of
2003, it plans to continue its share repurchase program in the future. Decisions
relating  to any  future  share  repurchases  will  take  various  factors  into
consideration such as the Company's desire to maintain investment grade ratings,
general business conditions, and other strategic investment opportunities.







FORWARD LOOKING STATEMENTS


THE  COMPANY'S  FORM 10-Q FILING  CONTAINS  STATEMENTS  Date  CONCERNING  FUTURE
RESULTS AND OTHER MATTERS THAT MAY BE DEEMED TO BE "FORWARD-LOOKING  STATEMENTS"
WITHIN THE MEANING OF THE PRIVATE SECURITIES  LITIGATION REFORM ACT OF 1995. THE
COMPANY  INTENDS THAT THESE  FORWARD-LOOKING  STATEMENTS,  WHICH LOOK FORWARD IN
TIME AND INCLUDE EVERYTHING OTHER THAN HISTORICAL INFORMATION, BE SUBJECT TO THE
SAFE  HARBORS  CREATED  BY  SUCH  LEGISLATION.  THE  COMPANY  NOTES  THAT  THESE
FORWARD-LOOKING STATEMENTS INVOLVE RISKS AND UNCERTAINTIES THAT COULD AFFECT ITS
RESULTS OF  OPERATIONS,  FINANCIAL  CONDITION OR CASH FLOWS.  FACTORS THAT COULD
CAUSE ACTUAL RESULTS TO DIFFER  MATERIALLY  FROM THOSE EXPRESSED OR IMPLIED IN A
FORWARD-LOOKING  STATEMENT INCLUDE THE FOLLOWING (AMONG OTHERS): EXTREME WEATHER
CONDITIONS THAT AFFECT THE DEMAND FOR THE COMPANY'S SERVICES; COMPETITION IN THE
MARKETS  SERVED BY THE  COMPANY;  LABOR  SHORTAGES  OR  INCREASES IN WAGE RATES;
UNEXPECTED  INCREASES IN OPERATING COSTS, SUCH AS HIGHER INSURANCE,  HEALTH CARE
OR FUEL PRICES;  INCREASED  GOVERNMENTAL  REGULATION OF  TELEMARKETING;  GENERAL
ECONOMIC  CONDITIONS  IN THE UNITED  STATES,  ESPECIALLY AS THEY MAY AFFECT HOME
SALES OR CONSUMER SPENDING LEVELS; TIME AND EXPENSES ASSOCIATED WITH INTEGRATING
AND WINDING DOWN  BUSINESSES;  AND OTHER FACTORS  DESCRIBED FROM TIME TO TIME IN
DOCUMENTS FILED BY THE COMPANY WITH THE SECURITIES AND EXCHANGE COMMISSION.


                                       15
<PAGE>




                    QUANTITATIVE AND QUALITATIVE DISCLOSURES
                                ABOUT MARKET RISK

The economy and its impact on discretionary consumer spending, labor wages, fuel
costs,  insurance  costs and medical  inflation  rates could be  significant  to
future operating earnings.

The  Company  does  not hold or  issue  financial  instruments  for  trading  or
speculative   purposes.   The  Company  has  entered  into  specific   financial
arrangements  in the normal course of business to manage  certain  market risks,
with a policy of matching  positions  and  limiting  the terms of  contracts  to
relatively short durations.  The effect of financial instrument  transactions is
not material to the Company's financial statements.

The Company  generally  maintains  the majority of its debt at fixed rates (over
95% of total debt at December 31, 2002 and March 31, 2003) and,  therefore,  its
exposure to interest  rate  fluctuations  is not  significant  to the  Company's
results of operations.  The payments on the approximately $73 million of funding
outstanding  under the Company's real estate  operating lease facilities as well
as its  cancelable  vehicle  fleet and  equipment  operating  leases are tied to
floating  interest  rates.  However,  the Company does not expect  interest rate
fluctuations to be significant to the Company's results of operations.

The Company has several debt and lease  agreements  where the  interest  rate or
rent payable under the agreements  automatically  adjust based on changes in the
Company's credit ratings.  While the Company is not currently expecting a change
in its credit  ratings,  based on amounts  outstanding  at March 31, 2003, a one
rating category improvement in the Company's credit ratings would reduce expense
on an annualized  basis by  approximately  $0.7 million.  A one rating  category
reduction  in  the  Company's  credit  ratings  would  increase  expense  on  an
annualized basis by approximately $1.3 million.

The following table summarizes  information  about the Company's fixed rate debt
instruments  as of December 31, 2002 and presents the  principal  cash flows and
related  weighted-average  interest rates by expected  maturity dates.  The fair
value of the  Company's  fixed  rate  debt was  approximately  $880  million  at
December 31, 2002.


                             Expected Maturity Date
--------------------------------------------------------------------------------
                                                              There-
 (In millions)       2003    2004    2005     2006    2007    after     Total
-------------------- ------- ------- -------- ------- ------- --------- --------
Fixed rate debt      $31     $24     $151     $11     $59     $559      $835
  Avg. Rate          4.2%    4.8%    8.2%     6.0%    6.7%    7.5%      7.2%
================================================================================


                                       16
<PAGE>









                             CONTROLS AND PROCEDURES

The Company's  Chairman and Chief Executive  Officer,  Jonathan P. Ward, and the
Company's  Chief  Financial  Officer,  Steven C.  Preston,  have  evaluated  the
Company's  disclosure  controls and  procedures  within 90 days of the filing of
this report.

Messrs.  Ward and Preston have concluded that the Company's  disclosure controls
and  procedures  provide  reasonable  assurance  that the  Company  can meet its
disclosure  obligations.  The Company's  disclosure  controls and procedures are
based  upon  a  roll-up  of  financial  and  non-financial   reporting  that  is
consolidated in the principal  executive office of the Company in Downers Grove,
Illinois.  The reporting process is designed to ensure that information required
to be  disclosed by the Company in the reports that it files or submits with the
Commission  is recorded,  processed,  summarized  and  reported  within the time
periods specified in the Commission's rules and forms.

There have been no significant  changes in the Company's internal controls or in
other factors that could  significantly  affect these controls subsequent to the
date of their evaluation.



                                       17
<PAGE>




PART II. OTHER INFORMATION

ITEM 1:  LEGAL PROCEEDINGS

In the  fourth  quarter  of 2001,  ServiceMaster  announced  the sale of certain
subsidiaries  of its  Terminix  European  pest  control  and  property  services
operations.  In the fourth  quarter of 2002,  the  purchaser  made a claim for a
purchase price adjustment,  relating to an alleged breach of certain  conditions
in  the  purchase  agreement.  In  the  course  of  responding  to  that  claim,
ServiceMaster  discovered  that  personnel  of the  former  operations  had made
unsupported  monthly  adjustments to certain  accounts.  In recognition of these
facts, ServiceMaster agreed to an adjustment to the purchase price consisting of
an $8 million cash payment and the  cancellation of a previously  reserved note.
On  March  14,  2003,   ServiceMaster  contacted  the  Securities  and  Exchange
Commission  on  its  own  initiative  and  has  provided  the  Commission   with
information regarding the activities at the former subsidiary.

On May 14, 2003,  the staff of the Securities  and Exchange  Commission  advised
ServiceMaster  that it had  concluded  its  review of  activities  at the former
subsidiary and has not requested any additional  information from  ServiceMaster
with regard to those activities.

The  Securities  and  Exchange   Commission   requires   disclosure  of  certain
environmental  matters where the amount involved exceeds $100,000.  The Terminix
International Company Limited Partnership,  a subsidiary of the Company, and the
Office of the  Attorney  General of the State of New York have been  involved in
discussions  regarding  Terminix's  compliance  with  Article 33 of the New York
Environmental  Conservation  Law regulating the  application of pesticides.  The
Company  does not expect this matter to result in a material  adverse  effect on
its financial condition or results of operations.

ITEM 6(A): EXHIBITS

EXHIBIT NO.       DESCRIPTION OF EXHIBIT
<TABLE>


               <C>
99.1              Certification of Chief Executive Officer Pursuant to Section 1350 of Chapter 63
                   of Title 18 of the United States Code
99.2              Certification of Chief Financial Officer Pursuant to Section 1350 of Chapter 63
                   of Title 18 of the United States Code
</TABLE>


ITEM 6(B):    REPORTS ON FORM 8-K

A report on Form 8-K was filed on April 24, 2003, reporting under "Item 5. Other
Events".  The  purpose  of the  report  was to  provide  under Item 7, the press
release  issued by the  Company on April 24,  2003  announcing  the  preliminary
financial results for the first quarter of 2003. This report also provides under
Item 7, restated quarterly  consolidated  statements of income for 2002 and 2001
and restated quarterly business segment disclosures for 2002 and 2001.

A report on Form 8-K was filed on March 17, 2003, reporting under "Item 5. Other
Events".  The  purpose  of the  report  was to  provide  under Item 7, the press
release  issued by the  Company on March 17,  2003  announcing  the  preliminary
financial results for 2002 and restated results for 2001 and 2000.







                                       18
<PAGE>






























                                    SIGNATURE


Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

Date:  May 15, 2003


                     THE SERVICEMASTER COMPANY
                     (Registrant)

                     By:                    /S/STEVEN C. PRESTON
                        ------------------------------------------------------

                                                Steven C. Preston
                     Executive Vice President and Chief Financial Officer









                                       19
<PAGE>















                    CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Jonathan P. Ward, certify that:

1. I have  reviewed  this  quarterly  report on Form  10-Q of The  ServiceMaster
Company;

2. Based on my  knowledge,  this  quarterly  report  does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not  misleading  with respect to the period covered by this quarterly
report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) designed  such  disclosure  controls and  procedures  to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others  within those  entities,  particularly  during the
period in which this quarterly report is being prepared;

b) evaluated  the  effectiveness  of the  registrant's  disclosure  controls and
procedures  as of a date  within  90  days  prior  to the  filing  date  of this
quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the effectiveness of
the  disclosure  controls  and  procedures  based  on our  evaluation  as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation,  to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

a) all significant  deficiencies in the design or operation of internal controls
which  could  adversely  affect the  registrant's  ability  to record,  process,
summarize and report  financial data and have  identified  for the  registrant's
auditors any material weaknesses in internal controls; and

b) any  fraud,  whether  or not  material,  that  involves  management  or other
employees who have a significant role in the registrant's internal controls; and

6. The  registrant's  other  certifying  officers  and I have  indicated in this
quarterly  report  whether or not there  were  significant  changes in  internal
controls or in other factors that could  significantly  affect internal controls
subsequent to the date of our most recent  evaluation,  including any corrective
actions with regard to significant deficiencies and material weaknesses.


Date:  May 15, 2003

                                /S/ JONATHAN P. WARD
                                ---------------------
                                Jonathan P. Ward
                                Chairman and Chief Executive Officer





                                       20
<PAGE>




                    CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Steven C. Preston, certify that:

1. I have  reviewed  this  quarterly  report on Form  10-Q of The  ServiceMaster
Company;

2. Based on my  knowledge,  this  quarterly  report  does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not  misleading  with respect to the period covered by this quarterly
report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) designed  such  disclosure  controls and  procedures  to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others  within those  entities,  particularly  during the
period in which this quarterly report is being prepared;

b) evaluated  the  effectiveness  of the  registrant's  disclosure  controls and
procedures  as of a date  within  90  days  prior  to the  filing  date  of this
quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the effectiveness of
the  disclosure  controls  and  procedures  based  on our  evaluation  as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation,  to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

a) all significant  deficiencies in the design or operation of internal controls
which  could  adversely  affect the  registrant's  ability  to record,  process,
summarize and report  financial data and have  identified  for the  registrant's
auditors any material weaknesses in internal controls; and

b) any  fraud,  whether  or not  material,  that  involves  management  or other
employees who have a significant role in the registrant's internal controls; and

6. The  registrant's  other  certifying  officers  and I have  indicated in this
quarterly  report  whether or not there  were  significant  changes in  internal
controls or in other factors that could  significantly  affect internal controls
subsequent to the date of our most recent  evaluation,  including any corrective
actions with regard to significant deficiencies and material weaknesses.


Date:  May 15, 2003

                         /S/ STEVEN C. PRESTON
                         ----------------------
                         Steven C. Preston
                         Executive Vice President and Chief Financial Officer




                                       21
<PAGE>